GENEVA, Oct. 13 : The World Trade Organization (WTO) on Tuesday ruled that the European Union (EU) can impose tariffs on U.S. products worth around 4 billion U.S. dollars, in retaliation for government subsidies given to the aircraft manufacturer Boeing.
The WTO said in an arbitration decision that the level of countermeasures, amounting to 3.99 billion dollars, is commensurate with the adverse effects suffered by Boeing’s European rival Airbus in terms of lost sales and impeded imports and exports of its aircraft.
In reaction, the U.S. Trade Representative Robert Lighthizer said in a press release that “the EU has no valid basis to retaliate against any U.S. products,” noting that the WTO arbitrator “did not authorize any retaliation for subsidies other than the Washington State tax break,” which was “repealed earlier this year.”
“The EU will immediately re-engage with the U.S. in a positive and constructive manner to decide on next steps,” tweeted Valdis Dombrovskis, the European Commission’s Executive Vice President in charge of trade.
“Our strong preference is for a negotiated settlement. Otherwise, we will be forced to defend our interests & respond in a proportionate way,” he added.
The long-standing issue between the EU and the U.S. began in 2004, when the U.S. accused France, Spain and Germany — also known as the “Airbus member states” — of providing illegal subsidies and grants to support the production of a range of Airbus products.
Following prolonged legal proceedings, the WTO allowed the U.S. to take countermeasures against European exports worth up to 7.5 billion dollars in October 2019. The basis for this was a 2018 decision that found that the EU and the “Airbus member states” had not fully complied with previous WTO rulings with regard to Repayable Launch Investment for the A350 and A380 programs.